In a positive development for Australia, Monochrome Asset Management has launched a spot Bitcoin Exchange-Traded Fund (ETF) on the Cboe Australia exchange. Notably, the Monochrome spot Bitcoin ETF (IBTC) represents Australia’s first and only ETF holding Bitcoin (BTC) directly.
Why IBTC stands out
Per an earlier report from U.Today, analysts anticipate the new spot Bitcoin ETF in Australia to generate inflows of about $1 billion.
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Samson Mow, the CEO of Bitcoin technology company JAN3, highlighted IBTC’s unique position on the ETF market. First, he noted that the Monochrome spot Bitcoin ETF offers global investors direct in-kind creation or redemption.
This feature allows them to directly exchange their Bitcoin for units of the ETF (IBTC) and vice versa, globally. This is quite different from other Bitcoin ETFs, especially those offered in the U.S. and Hong Kong, where investors typically deal with Authorized Participants (APs), who act as intermediaries.
$IBTC from @MonochromeAsset is now live on Cboe. It’s the first Australian ETF to hold #Bitcoin directly but moreover it uniquely offers in-kind creation/redemption for global investors DIRECTLY, not just APs. US and HK ETFs don’t have this (yet). Competition is heating up. 🔥🇦🇺 https://t.co/CGxpx5PDZc
— Samson Mow (@Excellion) June 4, 2024
Mow added that Monochrome also partnered with lending institutions in Australia to make its Bitcoin ETF an eligible security for sophisticated investors. As a result, they will be permitted to borrow money against their ETF holdings, using IBTC as collateral.
Benefits of IBTC for borrowers and Bitcoin miners
Compared to borrowing through pure coin loans, Mow emphasized that using IBTC as collateral offers potential advantages as it is considered a more established financial product. According to him, borrowing through IBTC might come with a better loan-to-value ratio (LVR) and lower interest rates than traditional pure coin loans.
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In addition, Bitcoin holdings of the ETF would not need to leave cold storage, even when borrowed against. This eliminates the risk of investors losing their Bitcoin holdings due to hacks or other security issues.
For Bitcoin miners, this feature could be a game-changer to help expand their operations. Bitcoin miners might use the IBTC borrowing option to access capital without selling their Bitcoin holdings.